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Surrey explains multi-million-dollar expenditure on new building

Author of the article:

Janet Steffenhagen

Publishing date:

February 11, 2010 • 3 minute read

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As mentioned two posts back, I asked Surrey school district for an explanation about the decision to spend $40 million on a new office building at a time of tight finances. Here is the response I received from communications manager Doug Strachan:

“You had asked to understand why the board decided to spend money on the new District Education and Conference Centre.

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“First, I think it’s important to understand, a project as large as the DECC takes years to prepare and plan and the board has had to make several decisions, committing increasing amounts of money and other resources to the project over the last six years. A significant amount of money (millions) and investment made to date would be substantially lost should the project now be indefinitely postponed. There would also be potential for lawsuits relating to contract cancellations should the board try to back out of commitments made.

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“As far back as the mid-1980’s, the board first approached the Ministry of Education seeking assistance with lease costs for a second thevancouversunistration building required at that time—money that had to come from operating funding. Since then, there have been many more requests for assistance – and many more buildings required to be leased, along with increasing, related costs as the district has been the most rapidly growing in the province for the last 15 to 20 years. There are now ten different thevancouversunistration buildings – including many portables employees have been working in for a decade or more – scattered across the district.

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“The DECC was identified as a need close to 20 years ago and had been put on hold many times since then, costing the district over a million dollars every year in lease costs, high maintenance and upgrade costs, excessive energy costs and staff inefficiencies (such as time spent traveling between several locations every day). Independent consultants estimate the district is now wasting about $1.25 million every year on these costs—money saved with the new building.

“The ministry would not contribute to mitigate these costs, nor assist in building a new office.

“Construction costs during times of economic boom, as witnessed during the 2003 to 2008, are very expensive because there is more demand for contractors. Material and labour costs are much higher. Construction deadlines are also subject to delays (therefore, increased costs) because of insufficient labour and materials. By building the DECC during a slumping economy, the district has saved an estimated five to ten million dollars on construction costs.

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“District-owned buildings the DECC is to replace are already inadequate, or at, or near, the end of their serviceable life and need to be replaced or substantially renovated. This requires ongoing, significant spending – whether through the increasing need for repairs, the need for renovation/expansion or the need to replace an existing building beyond repair.

“Beyond the financial costs, there would be significant productivity costs through work interruptions for repairs or renovations. This money is better off going towards the DECC. (For example, the current thevancouversunistration building is 50 years old and as mentioned, was identified as needing replacement about 20 years ago).

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“All the costs associated with the DECC project would almost certainly rise each year, while the annual $1.25 million savings (these costs can be expected to increase each year as well) to be realized is lost to classrooms each year the DECC is not in operation.

“In addition, the DECC will enable the district to substantially meet new provincial government requirements for the reduction of the public sector “carbon footprint”. A mechanical consultant calculated the district’s carbon reduction by consolidating into the new DECC at 62.5 per cent, along with a reduction in gas and electricity costs of 54.7 per cent.

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“The district will realize profit from the sale of district-owned buildings the DECC is to replace, or alternatively, existing buildings or land could potentially be reused for other district purposes, saving the cost of buying new land or leasing more space.

“Since the district had saved up to pay the cost of the new building entirely on its own, the annual $1.25 million in energy, lease and other savings will be able to be invested immediately into classroom education and supporting initiatives; the money won’t need to be spent on financing costs.

“During a recession and high unemployment, the DECC project is generating hundreds of much-needed jobs and economic spin-off benefits to Surrey and beyond.”

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